After a prolonged slowdown, the real estateindustry is now hoping that new measures by the government such as housing for all and opening up of foreign direct investment alongside softening of interest rates could bring in the much needed push for the sector. ETRealty.com spoke to Vineet Relia, managing director, SARE Homes on what 2016 has in store for the industry. Excerpts:

How would you describe the current situation of the real estate market in India in 3-4 lines?

From the investment perspective, the sector has shown a renewed investor confidence and a positive outlook for the sector on account of the foreign capital inflows through all-equity buyouts by big institutional players. This could be attributed to a number of reforms such as the introduction REITs, the evolution of FDI policy, AMRUT scheme among others. However, at the inventory front, there still appears to be a demand-supply mismatch in the residential segment. According to a report by Knight Frank, the housing market seems to be struggling in terms of project launches. Sales have continued to drop for the last two-and-a-half years and there is no sign of recovery in the coming six months. The sentiment is expected to continue till the time the process of project approvals does not get streamlined. What could’ve been a key reform by the government, the Real Estate Bill seemed to have a hit a roadblock after initial discussions.Having said that, the overall outlook remains positive and we can expect an encouraging pick up in volumes at the back of government initiatives such as the Smart Cities project and Housing for all by 2022 and increasing (real estate) FDI investment prospects for the country.

How do you see the real estate market changing in 2016? Do you see an improvement in buyer sentiment? What is your advice to them for buying homes in 2016?

The overall investment climate is improving and the government has suggested reforms to elevate India’s status on the global arena. The real estate market is currently coming to terms with effects of various policy changes and initiatives. Government initiatives such as Housing for all, Smart Cities mission will witness their due course of action in 2016. Long term effects of the September monetary policy review and the seventh pay Commission are expected to show in 2016 with a pickup in sales. This will prove to be beneficial to improve buyer sentiment and build confidence among the investors. Tier II cities can turn out to be excellent investment options for both developers and buyers due to the fast paced infrastructure development and availability of land and labour.

Interest rates have dropped a bit over the last six months. Have the funding woes for real estate developers started to ease? Are there any new funding avenues for builders today?

PE funds have invested $2.4 billion in 53 real estate deals in 2015. Both luxury and affordable housing segment have attracted huge amount of capital. Also, the government has relaxed FDI policy in terms of area of the project and threshold investment limit. Introduction of REITS is again a welcome move to attract investments. This is a clear signal that opportunities for capital inflow into the sector have increased. Although, RBI has also reduced repo rate by 1.25 basis points this year, the banks still have to pass on benefits of these rate cuts to the end consumers.

What are your expectations from the Union Budget 2016? What will be the impact of GST and real estate regulatory bill, if cleared in 2016, on the real estate sector?

The Real Estate Bill, if implemented, would be a beneficial situation for the developers, consumers as well as the investors. Such a move would encourage transparency and create uniformity in an unregulated market. Implementation of a single window system to encourage a faster approval process and 70 per cent of the sales proceeds being parked in an escrow account are two sides of the same coin. Effectiveness of both the measures, though with individual benefits, is jointly aimed at achieving the overall objective of timely project completion.

We are expecting major announcements in terms of improving investment and taxation climate in real estate sector from the forthcoming Union budget 2016. Passage of the GST Bill could have enhanced ease of doing business opportunities in the country due to one uniform tax across all states.

Which are the three top micro markets in India today from an investment perspective on which you would bet your personal monies for medium to long term?Key micro-markets such as Ghaziabad (NH – 24), New Gurgaon and OMR (Old Mahabalipuram Road) have witnessed a high percentage of appreciation on investments. A constantly improving social and physical infrastructure has been a major driver for real estate investments in these markets and at SARE, we have focused on emerging markets from the beginning.